When a land buyer is shopping for a piece of farmland, they must compare many different aspects of the land. A land buyer should do plenty of research prior to making a purchase including studying farmer demands, rent prices, comparable land sales, yields, wetness and many other factors. Often the easiest comparison to draw between parcels will be a soil rating. In the state of Iowa, they use a Corn Suitability Rating (CSR). A parcel’s CSR acts as a standard for comparing different pieces of land. CSR assesses only the inherent productivity. Factors such as buildings, location, water supplies, crop and noncrop acreages, and other management features must be subsequently evaluated, according to Iowa State University.
CSR is an index procedure developed in Iowa to rate each different kind of soil for its potential row-crop productivity, according to Iowa State University. CSR is based on a 100.0 scale.
Other states have soil rating systems, but Iowa’s CSR has proven to be very easy to understand, and effective.
A field’s average CSR is the number that is used for comparisons. If field A has a CSR of 82.5, and field B has a CSR of 85.0, field A should carry a lower price tag per acre. There are many other factors that could easily justify a higher price from a farm with a lower CSR, but typically CSRs can be a great standard for comparing parcels. It measures the pure productivity of the soil.
After comparing CSRs, a buyer should get an appraisal done so a professional can give their opinion of a market value. An appraiser will use the CSR, but also many other factors to conclude a market price.
Investment land
When purchasing land as an investment, soil ratings should be a large factor in determining the quality of investment. A farm with a CSR that is high will retain its value better than a farm with a lower CSR during times when farmland values are decreasing; which has only occurred three times in the past century.
Higher quality farms are less volatile to outside factors. For example, high quality land will absorb nutrients very efficiently, keeping fertilizer costs stable. A poor quality piece of farmland might absorb nutrients at a less efficient level and fertilizer costs will affect the profit margin of the farmer that is farming that piece.
There will always be farmland buyers that are looking to purchase the best land that they can find at that specific time. High quality land should remain a strong investment for years to come.
Remember to visit Farmland Forecast (farmlandforecast.colvin-co.com) for your daily update on news and research about agriculture and farmland.
